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eBay Delivers Another Excellent Quarter

eBay continues to deliver for investors. Best of all, shares are still cheap for its prospects.

eBay(NASDAQ:EBAY) just reported its fourth-quarter earnings, finishing the year with continued strength from all of its businesses. The company closed the final quarter of 2012 with revenues of $4 billion, an increase of 18% from the previous year. In terms of net income, eBay's fourth-quarter net income rose 17% to $927 million, or $0.70 a share. Analysts were expecting eBay to earn $0.69 a share on revenues of $3.98 billion.

Segment

Q4'12 Revenue

YoY Change

% of Total

Payments

$1,541

24%

39%

Marketplaces

$2,050

16%

51%

GSI

$398

10%

10%

Source: eBay press release .

PayPal continues to be eBay's strongest growth driver, with transaction volume reaching $41.5 billion in the quarter, a 24% year-over-year increase. The key factors behind this growth were continued merchant and consumer adoption coupled with geographic expansion. PayPal ended the year with 123 million registered accounts, having adding 2 million during the period. This membership growth pace represented the strongest the company has seen "in years." On a year-over-year basis, the number of registered PayPal accounts grew by 15% .

Mobile explosionMobile transaction volumes continued see explosive growth. For the full-year, eBay mobile finished the year with $13 billion in volume, up more than 100% from the previous year, and PayPal finished the year with $14 billion, up more than 250% in the same time frame. If this is any indication, consumers have begun shifting their e-commerce behaviors over to tablets and smartphones in a big way. The company fully expects each mobile segment will see volumes reach $20 billion by the end of this year.

The future is brightBased on the facts that eBay's core marketplace business remains robust, its PayPal business is growing like gangbusters, and mobile remains a future growth catalyst, shares look extremely attractive for the money. Mobile payments is one of my top investing themes for investors to consider in 2013. According to IDC, worldwide purchase volume on mobile devices will exceed $1 trillion by 2017, putting PayPal in a great position to take advantage of this boom. This sets the stage for PayPal to become a larger business for eBay than where its core marketplaces business is today. For only 18 times earnings, you get the opportunity to buy an excellent company that's already capitalizing on the mobile payments revolution.

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